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Morningstar Sticks to $65 Brent Forecast But Geopolitics Could Spark a Shock
At a glance
- •Morningstar maintains a mid-term Brent forecast of $65 per barrel.
- •A U.S. strike on Iranian oil infrastructure could provoke a sharp price spike, though Morningstar rates that risk as low.
- •The IEAs planned release of 400 million barrels is seen as temporary relief, not a structural fix.
- •Global economic resilience matters: prolonged supply shocks could lead to demand destruction.
- •Morningstar prefers U.S. shale producers, Canadian crude and refinery operators; service firms and Middle East-exposed companies face more risk.
Market Analysis
Morningstar remains committed to a mid-term price forecast of $65 per barrel for Brent crude, but the research house warns that the market could quickly be jolted if the United States were to strike Iran's oil infrastructure. Joshua Aguilar, a director at Morningstar, told ntv that while the risk of a U.S. attack is considered low, its consequences would be severe and could trigger another surge in oil prices.
The firm also downplayed the market impact of the International Energy Agency's planned release of 400 million barrels from strategic reserves. Aguilar argued that such releases are temporary relief measures: they can ease short-term bottlenecks but do not resolve structural supply issues. In other words, a large coordinated stock release may blunt immediate pressure but cannot fix deeper imbalances in supply and demand.
A second major uncertainty is the global economy. Morningstar cautions that prolonged supply disruptions could lead to demand destruction, and an economic recession would further weaken oil consumption. That means oil prices will be determined not only by geopolitical tensions in the Middle East but also by how resilient global demand turns out to be in the coming months.
At the time of reporting, Brent was trading at $103.51 per barrel and WTI at $96.41 per barrel (time: 11:28 CET). Given this backdrop, Morningstar advises investors to favour U.S. shale oil producers, Canadian crude producers and refinery operators, which can benefit from current price dynamics and regional pricing structures. By contrast, service companies and firms with significant exposure to the Middle East face greater headwinds in Morningstar's view.
What investors should watch
Key near-term catalysts include any escalation of U.S.-Iran tensions, further coordinated releases from strategic reserves, and fresh macro data that alters the outlook for global demand. For market participants, the message is twofold: geopolitical risk can quickly push prices higher, but persistent economic weakness would cap upside by eroding demand.
Author: Ferdinand Hammer, wallstreetONLINE editorial team.
